Christoph Herwartz, correspondent in the Handelsblatt office in Brussels, analyzes trends and conflicts, regulatory projects and strategic concepts from the inner workings of the EU. Because anyone who is interested in business needs to know what’s going on in Brussels. You can reach him at [email protected]
If the Commission has its way, the EU will soon adopt a hefty price increase for gas, heating oil, diesel and petrol. From today’s perspective, this proposal sounds downright ridiculous. Because the opposite is happening.
Anything that can keep the price down is discussed. France intervenes in the market and caps prices. Spain drastically cuts the electricity tax. There is panic that voters are blaming the high prices on their politicians.
Does a higher gas price endanger the climate protection package? In part, yes. There is already another problem, particularly with emissions trading for buildings and transport. The idea is that those who sell oil and gas must have CO2 certificates to do so. That makes driving and heating more expensive and should create an incentive to switch to economical or electric cars and to equip houses with better thermal insulation.
This makes sense in economic theory. And emissions trading for industry proves that the instrument works. But in the discussion in Brussels, someone always shouts the word “yellow vests” into the room at this point. Everyone knows what this means: that the prices for fuel must not rise too much, because otherwise commuters will go on the barricades.
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At the end of 2018, French President Emmanuel Macron announced higher diesel taxes and then it took months to stop the violent protest. Since then, turning up the price of diesel has seemed like political stupidity to many.
Renewable energies must be expanded more
Nothing was left of Macron’s reform, and the CO2 certificates for buildings and traffic could also be postponed until they are no longer needed, because heating and driving are already climate-neutral anyway.
Because if, for example, internal combustion engines are no longer allowed to be approved in the future, it will soon be relatively irrelevant how much the diesel costs. And a well-insulated house can already be heated most cheaply with an electrically operated heat pump. There are funding programs for this. For this to work out, renewable energies must be expanded significantly – and much more so than has been provided for in the Commission’s proposals so far.
Because the certificates for buildings and traffic are only expected to cost money across Europe from 2026, as has been the case in Germany since the beginning of the year. By then, if dependence on oil and gas has decreased, the price will also decrease and the volatility will decrease. This would give an incentive again to consume more. It is then all the more important to make raw materials more expensive so that it is still worthwhile to be economical.
If the new emissions trading is eliminated or if it is severely weakened, another core element of the European climate protection package will falter: the social fund, which is supposed to finance social aid with the income from the certificates.
It is needed because its complicated distribution formula can be negotiated at will. The Social Fund could also enable countries to approve the climate protection package that would be at a disadvantage without it.
More: In Brussels, the important items of the so-called rapporteurs are currently being auctioned off to the highest bidder. The result can shape climate policy.